New Language for Leases
LA-based owner and developer Kilroy earlier this year inked a major deal with Dropbox for 100% of the 182k SF, LEED Platinum 333 Brannan St under development in San Francisco. The green language it contained may soon be coming to a lease near you.
Kilroy VP of sustainability Sara Neff tells us green leases align the landlord and tenant's financial and environmental interests. Standard lease language is a major barrier to sustainability in real estate, she says; you can buy a high-performance building, but if your leases prevent you from operating it sustainably, it's not a sustainable building. (Sort of like filling up your Prius with leaded gas.)
Every lease Kilroy has signed since last summer has contained at least some green language, Sara tells us. Above, Kilroy also recently signed a green lease with Riot Games, publisher of the League of Legends online games (which we know because someone told us, not because we play it all day every day), for 100% of 12312 W Olympic Blvd in its Westside Media Center HQ campus in LA. And Sara says that as a tenant, the State of California only takes space in LEED buildings or space that becomes LEED certified prior to move-in; otherwise, it can pay 10% less in rent in perpetuity.
Sara (with some of the firm's awards for sustainability) says the only push-back has been on a clause requiring tenants to disclose their utility use data to the landlord. But, she notes, landlords are required in certain instances to report their buildings' energy usage under California Assembly Bill 1103. Plus it starts a conversation on reducing consumption. Kilroy recently was named a Green Lease Leader—a new recognition program launched by the Institute for Market Transformation and the US Energy Department's Better Buildings Alliance. Collectively, the 14 inaugural Green Lease Leaders own or manage 400M SF on four continents.
